Monopsony Power, Pay Structure and Training

Samuel Mühlemann (), Paul Ryan () and Stefan Wolter
Additional contact information
Samuel Mühlemann: University of Munich
Paul Ryan: King's College Cambridge
Authors registered in the RePEc Author Service: Samuel Muehlemann

No 5587, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Although interest in monopsonistic influences on labour market outcomes has revived in recent years, only a few empirical studies provide direct evidence on it. This paper analyses empirically the effect of monopsony power on pay structure, using a direct measure of labour market 'thinness'. We find that having fewer competitors for skilled labour is associated at the level of the establishment with lower pay for both skilled labour and trainees, but not for unskilled labour. These findings have potentially important implications for the economic theory of training, as most recent models assume that skilled pay is set monopsonistically but both unskilled and trainee pay are determined competitively. Our results support those assumptions for skilled pay and unskilled pay, but not for trainee pay.

Keywords: firm-sponsored training; wage differentials; monopsony (search for similar items in EconPapers)
JEL-codes: J24 J31 J42 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2011-03
New Economics Papers: this item is included in nep-lab
References: View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published - published in: Industrial and Labor Relations Review, 2013, 66 (5), 1095-1112

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Related works:
Journal Article: Monopsony Power, Pay Structure, and Training (2013)
Working Paper: Monopsony power, pay structure and training (2011)
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